Kazakh uranium miner Kazatomprom says will produce only 80% of permitted levels in 2024

Kazakh uranium mining company Kazatomprom, the world's largest uranium miner, said in a trading update Feb. 1 that it will produce only 80% of its permitted maximum uranium output allowed under Kazakh subsoil usage contracts, instead of the previously announced 90% level, due to difficulties procuring sufficient levels of sulfuric acid, a key ingredient in the company's in-situ uranium mining process.

Kazatomprom produces around 20% of the world's uranium. The company had warned in a Jan. 12 statement about the potential to not meet the previously indicated 90% level due to the sulfuric acid issue and "delays in completing construction works at newly developed [uranium] deposits."

Kazatomprom in the Feb. 1 statement said it had produced 21,112 mtU, or just under 80% of the permitted maximum under the subsoil usage contracts, in 2023, 1% lower than the 21,227 mtU produced in 2022 as a whole. If it were to produce 90% of allowed levels under the subsoil usage contracts in one year, this would equate to roughly 23,500 mtU. The company said Feb. 1 that it expected to produce between 21,000 mtU and 22,500 mtU in 2024 as a whole.

The company has since 2018 produced only 80% annually of the maximum permitted under the subsoil usage contracts but had said that it expected to return to the 90% level in 2024 and to 100% in 2025. The output limits had been self-imposed due to the previously depressed state of the uranium market and demand for the commodity.

Kazatomprom said in the statement that due to increased "domestic consumption and the demand for" sulfuric acid for fertilizer production over the past few years, a shortage of sulfuric acid has "developed in the domestic market." "Regional markets are also experiencing a deficit due to growing demand from the agricultural sector and a combination of factors such as supply chain disruptions and geopolitical uncertainty," the company noted.

It said that if the limited access to sulfuric acid "continues throughout the current year and the Company does not succeed in reducing the delay in the construction schedule at the newly developed deposits in 2024," this could also "unfavorably influence Kazatomprom's production plans for 2025."

If there are adjustments to the 2025 production plans, these are "expected to be announced in the report of the Company's financial results for the first half of 2024. However, a swift return to a 100% production volume level relative to Subsoil Use Agreements may be at risk," the company said.

Kazatomprom also said it is "actively pursuing alternative sources" for sulfuric acid procurement. In the medium term, the sulfuric acid "deficit is expected to alleviate as a result of the potential increase in supply from local non-ferrous metals mining and smelting operations" and from in-house sulfuric acid production from a new sulfuric acid plant the company is building in Kazakhstan.

The company was bullish in its comments in the update on uranium demand, noting that the construction of new reactors around the world to help meet carbon reduction targets and a uranium supply shortage in the short and medium term were supportive of prices. The uranium "spot price kept setting new records in December -- for the first time in 16 years, the spot price exceeded $90 mark," the company said.

Platts, part of S&P Global Commodity Insights, assessed the front-month uranium price at $101.35/lb Jan. 31.